Activist investor Elliott attacks SSE over renewable energy plans

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Hedge fund Elliott Management is calling for a radical change in Scottish energy group SSE, including the appointment of two new independent directors in a scorching attack on SSE’s energy transition strategy.

so 10-page letter SSE Chairman Sir John Manzoni, announced Tuesday, criticizes the work of long-time CEO Alistair Phillips Davis by the U.S. Activist Fund. A series of reforms Providing better funding for renewable energy businesses as a “missed opportunity”.

This letter is the first public comment on SSE’s strategy since Elliott acquired shares in the business this year and began personally urging management to split its power network and renewable energy sectors into two separate listed companies. is.

The SSE campaign will be the second largest FTSE 100 company targeted by hedge funds this year after attempting a shake-up with a UK healthcare group GlaxoSmithKline..

Sector-wide energy companies are working on ways to overhaul the global energy system and fund the investment in renewable infrastructure needed to reduce carbon emissions.

Was one of the sponsors of SSE November COP26 Glasgow’s Climate Summit has the largest renewable energy portfolio in the UK. It also owns the major power grids in northern Scotland, local networks in England’s regions such as Oxfordshire, and other assets, including gas-fired power plants.

“SSE owns one of the UK’s most attractive renewable energy and network asset portfolios,” Elliott said in a letter, but its stake is about 30% of the value of these businesses. Said it was traded at a discount. The current market value of SSE is $ 17 billion.

“The market’s failure to attribute fair value to SSE and its portfolio is directly due to the company’s inefficient conglomerate structure and misleading equity story,” he said. “Renewable energy and networks are essentially different businesses, supported by diverse shareholder registrations, with individual funding needs, growth profiles, and strategic priorities.”

Elliott’s investment in SSE First reported in September.. Hedge funds are among the top five shareholders and have shared their views with SSE management for “months” in a letter.

Nevertheless, SSE was in November Reject spin-off We are in favor of promoting investment in renewable energy by selling a 25% stake in the power grid business and reducing dividends.

SSE will make it difficult for investors at the time to spin off or sell renewable energy businesses to increase costs and fund large projects such as the 3.6GW wind farm under construction off the northeast coast of England. I said it would be.

Elliott described the argument as “functional” and the proposal lacking “ambition.” He added that there was a “history of poor performance” during his eight-year tenure with Phillips Davis.

SSE’s share price fell 4% on November 17, after the announcement.

Elliott also criticized the review process behind the new strategic decision. It is described as “opaque” and “seriously flawed”.

“This raises questions about SSE’s corporate governance and the board’s ability to oversee renewable energy strategies, despite the lack of renewable energy expertise among non-executive directors,” he said. Said.

In response, Elliott calls for the appointment of two new independent directors with renewable energy experience and the establishment of a committee of independent directors to lead further reviews of SSE’s strategy.

The review should include the sale of larger shares in the power network business and the consideration of the partial listing and sale of shares in the renewable energy sector.

“SSE must act swiftly to restore investor confidence so that shareholder value does not decline permanently,” Elliott said.

Activist investor Elliott attacks SSE over renewable energy plans Source link Activist investor Elliott attacks SSE over renewable energy plans

The post Activist investor Elliott attacks SSE over renewable energy plans appeared first on California News Times.

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